Every Independent Retailer Must Get Profitable - Now!

I just did get to the most recent issue of Newsweek

, and there on page 16 was this factoid:

"45% of the 27 million small businesses in the U.S. say they are currently not profitable. Those businesses, which employ 100 or fewer people, make up half the nation's private non-farm GDP."

I can't say that the number surprised me, but when you actually read it, you can't help being taken aback. 45% of the small businesses in the country are losing money! What really struck me, however, was the realization that if that many of our small businesses are losing money, the percentage for independent retailers is likely higher, perhaps much higher.

If you are an independent retailer, and you're not currently profitable, you must do whatever you must to get yourself profitable, now. Most independent retailers have spent the first part of this year trying to find ways to generate more business. Many have accepted that for the short term they are not going to be profitable, while they ride the downturn out. Some have felt they had enough cash on hand to weather the storm, while others have been white-knuckling it.

Given the current environment, however, it's simply not prudent to assume sales are going to turn anytime soon. This isn't to say that you shouldn't continue to do the things I've written about before to re-invigorate your business. You should. But in this environment, with consumers showing no signs of coming out of their bunkers, thinking that sales will turn before long and the storm will have passed is just not realistic.

In your business planning, you should assume that your revenue now is what your revenue will be. Then you must do whatever you need to do to make sure that your bottom line is in the black.

This is what the major national retailers have done. All have cut inventories and slashed expenses to make sure they continued to turn a profit. Much of the cutting has been payroll, and it's not been pleasant. But as the second quarter results have been reported in the last week or so, most have been in the black, even while reporting serious drops in revenue. They are determined not to bleed cash by running losses. They have prepared as best they can for the long haul.

These retailers obviously had much bigger budgets than any independent retailer, so there was perhaps more options for them in reducing expenses than you might have. But that does not change the imperative. If your cash is starting to get tight, act now. Even if you have what you feel is a healthy cash balance on hand, get profitable and preserve that cash.

The recession may be coming to an end, but there are very few experts who think that the recovery will be anything other than a long, hard slog. Given that, those 45% of the nation's small businesses that are currently unprofitable are, by definition, in trouble. If you are one of them, do what you have to do to get yourself out of trouble - now!

Copyright (c) 2012 Ted Hurlbut

by: Ted Hurlbut

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